I received CAUSE CD NO. 201 605062 request from White Star Petroleum, to drill two additional horizontal wells because the single well cannot adequately and efficiently develop the entire unit . White Star is taking over Devon as operator in this area. I have depth clauses in my original lease and this is in respect to the Mississippian assets.
Can these new wells be subject to the terms of a depth clause?
It depends on the wording of your depth clause in your lease. http://www.hh-law.com/horizontal-drilling-leasing-issues/
I think this is what I used but I'll have to check my lease again to be sure. Thanks.
DEPTH CLAUSE: In the event this lease is extended by commercial production beyond its primary term, then on such date this lease shall terminate as to all rights one hundred feet and more below the stratigraphic equivalent of the deepest producing perforations in the well or wells located on the leased premised, or land unitized therewith. If the lessee is in the process of drilling or completing a well at the end of the primary term of this lease, this clause shall become effective upon conclusion of such operations.
Notwithstanding anything to the contrary, it is agreed that should Lessee exercise his option to pool or combine any portion of the land covered hereby with other lands, lease or leases as hereinbefore provided, then such operations and production on and in any such pooled unit as herein provided, shall continue this lease in force and effect during or after the primary term as to that portion of the lands covered by this lease, included in such unit or units as hereinabove provided, but not as to such portion of said lands covered by this lease and not included in any such unit. This lease may be kept in force and effect as to such remainder in any manner elsewhere provided in this lease not inconsistent with this paragraph.
I'm not an attorney, but you do have a "Horizontal Pugh Clause", which operates to terminate the lease based on producing perforations in the well and non-lease hold premise and non-unitized lands, so your lease should continue in force.
I'll have to check my records to be sure, but I believe there was labeling involved--perhaps this:
Vertical Pugh Clause
It is understood and agreed that one (1) year after the expiration of the primary term of this lease, upon the expiration of any extension or renewal, or after cessation of operations as provided herein, whichever occurs last, Lessee shall release all rights lying below the stratigraphic equivalent of one hundred feet (100') below the base of the deepest producing formation in any well drilled on the leased premises or on lands with which the leased premises has been pooled or unitized.
Horizontal Pugh Clause
Notwithstanding anything to the contrary, it is agreed that should Lessee exercise his option to pool or combine any portion of the land covered hereby with other lands, lease or leases as hereinbefore provided, then such operations and production on and in any such pooled unit as herein provided, shall continue this lease in force and effect during or after the primary term as to that portion of the lands covered by this lease, included in such unit or units as hereinabove provided, but not as to such portion of said lands covered by this lease and not included in any such unit. This lease may be kept in force and effect as to such remainder in any manner elsewhere provided in this lease not inconsistent with this paragraph.